-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VxYbh2WVXZHBqZPbl2bQf9IAIep5MhyuQRwGAIz+dsg+C0ez6CTZLxeAui8gvYPl IxKnTAUMZlUEAqAYsYxCBg== 0000897101-01-000174.txt : 20010224 0000897101-01-000174.hdr.sgml : 20010224 ACCESSION NUMBER: 0000897101-01-000174 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010222 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DONALDSON CO INC CENTRAL INDEX KEY: 0000029644 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564] IRS NUMBER: 410222640 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07891 FILM NUMBER: 1552277 BUSINESS ADDRESS: STREET 1: 1400 W. 94TH ST. CITY: MINNEAPOLIS STATE: MN ZIP: 55431 BUSINESS PHONE: 6128873131 MAIL ADDRESS: STREET 1: 1400 W 94TH STREET CITY: MINNEAPOLIS STATE: MN ZIP: 55431 8-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 February 22, 2001 (Date of earliest event reported) DONALDSON COMPANY, INC. (Exact name of Registrant as specified in its charter) Delaware 1-7891 41-0222640 (State of (Commission File No.) (IRS Employer Incorporation) Identification No.) 1400 West 94th Street Minneapolis, Minnesota 55431 (Address of principal executive offices, including zip code) (952)887-3131 (Registrant's telephone number, including area code) Item 5. Other Events. On February 22, 2001, the Company issued a press release in the form attached as Exhibit 99.1 to this Form 8-K. Item 7. Exhibits 99.1 Press Release dated February 22, 2001 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DONALDSON COMPANY, INC. By /s/ Norman C. Linnell --------------------- Name: Norman C. Linnell Title: Vice President Date: February 22, 2001 EXHIBIT INDEX Exhibit Description 99.1 Press Release, dated February 22, 2001 EX-99.1 2 0002.txt PRESS RELEASE EXHIBIT 99.1 February 22, 2001 FROM: FOR: Padilla Speer Beardsley Inc. Donaldson Company, Inc. 224 Franklin Avenue West P.O. Box 1299 Minneapolis, MN 55404 Minneapolis, MN 55440 Tony Carideo Rich Sheffer (612) 872-3720 (952) 887-3753 FOR IMMEDIATE RELEASE - --------------------- DONALDSON COMPANY ANNOUNCES RECORD SECOND-QUARTER AND SIX-MONTH RESULTS SECOND QUARTER REVENUE UP 8 PERCENT AND 13 PERCENT YEAR-TO-DATE, AIDED BY ACQUISITIONS; INDUSTRIAL SALES REMAIN STRONG, UP 42 PERCENT IN THE SECOND QUARTER AND UP 43 PERCENT YEAR-TO-DATE; EPS AT 40 CENTS, UP 8 PERCENT MINNEAPOLIS, Feb. 22 -- Donaldson Company, Inc. (NYSE: DCI), today reported record revenue of $279.6 million for its second fiscal quarter ended January 31, 2001. Revenue for the quarter was up 7.9 percent from $259.3 million in the same period last year; excluding the impact of businesses acquired in the prior year, revenue was up 1.5 percent. Net earnings were $18.1 million, up 4.0 percent from $17.4 million last year. Diluted net earnings per share of 40 cents were up 8.1 percent from 37 cents in the prior year. For the six-month period, the company reported record revenue of $569.5 million, up 12.6 percent from $505.8 million last year. Excluding the impact of businesses acquired in the prior year, revenue was up 4.7 percent. Net earnings were $34.9 million, an increase of 1.4 percent from $34.4 million last year. Diluted net earnings per share of 77 cents were up 5.5 percent from 73 cents last year. "Business conditions in the first half of fiscal 2001 were challenging, but we believe that we've performed very well," said William Van Dyke, chairman, president and chief executive officer. "We absorbed significant plant rationalization costs, turmoil in the North American heavy truck market, integration of our largest acquisition to date, pressure from the strong U.S. dollar and still achieved solid growth over the prior record year." (more) Donaldson Company, Inc. February 22, 2001 Page 2 The impact of foreign currency translation, mainly due to the continued weakness of the Euro against the U.S. dollar, resulted in a decrease in net sales of $9.9 million from the second quarter last year and a decrease in net earnings of $0.8 million for the quarter. Year-to-date, foreign currency translation has resulted in a decrease in net sales of $18.2 million and a decrease in net earnings of $1.1 million. Excluding the effect of foreign currency translation, local currency revenues outside the U.S. increased almost 31 percent in the quarter and 35 percent year-to-date, which would have resulted in a worldwide revenue increase of 11.7 percent in the quarter and 16.2 percent year-to-date. Gross margin was 30.9 percent, an improvement from 30.7 percent in the same period in the prior year, and a significant improvement from the first quarter gross margin of 29.7 percent. The improvement in gross margin over the first quarter was driven by higher margins in the Industrial Products segment. Year-to-date, gross margin was 30.2 percent versus 30.3 percent last year. Operating expenses were 21.0 percent of sales, up from 20.6 percent last year. Year-to-date, operating expenses were 20.5 percent of sales versus 20.2 percent last year. The increase in the operating expense percentage was driven by last year's DCE acquisition, which has a higher operating expense percentage than the company's base businesses. Excluding DCE, the operating expense percentage was in line with prior year results. Operating income of $27.5 million was up 5.0 percent from $26.2 million in the second quarter last year. Operating margin for the quarter was 9.8 percent, down from 10.1 percent reported for the second quarter in the prior year. Year-to-date, operating income was $55.4 million, up 7.9 percent from $51.3 million last year. Operating margin was 9.7 percent versus 10.1 percent last year. Other income for the quarter increased to $1.6 million, up $1.1 million, which included a gain on the sale of the laminar flow product line. Year-to-date, other income was $0.8 million, a decrease of $0.5 million. Interest expense increased to $3.2 million, up $1.4 million, reflecting the higher short-term debt levels related to last year's acquisitions. Year-to-date, interest (more) Donaldson Company, Inc. February 22, 2001 Page 3 expense was $6.3 million, up $2.9 million from last year. The income tax rate for the quarter and year-to-date was 30 percent, unchanged from fiscal 2000. EBITDA for the quarter was $37.4 million, an increase of 10.2 percent compared to $33.9 million last year. Year-to-date, EBITDA was $74.3 million, an increase of 11.8 percent compared to $66.4 million last year. Year-to-date, cash generated by operations was $26.4 million. The cash generated, plus additional debt of $8.1 million, provided the funding for capital expenditures of $15.3 million, the repurchase of $10.3 million of stock and the payment of $6.4 million in dividends. BACKLOG Total backlog of $352 million was up 21 percent from the same period last year and up 12 percent from the prior quarter end. In the Industrial Products segment, total backlog increased 61 percent from the same period last year and 23 percent from the prior quarter end. In the Engine Products segment, total backlog decreased 6 percent from the same period last year but increased 2 percent from the prior quarter end. Hard order backlog - goods scheduled for delivery in 90 days - totaled $173 million, up 4 percent from the same period last year but down 6 percent from the prior quarter end. In the Industrial Products segment, hard order backlog increased 25 percent from the same period last year but decreased 13 percent from the prior quarter end. The 13 percent drop reflects exceptionally strong second quarter sales compared to the same quarter last year and the first quarter this year (sales were up 42 percent and 15 percent respectively). In the Engine Products segment, hard order backlog decreased 9 percent from the same period last year but increased 2 percent from the prior quarter end. INDUSTRIAL PRODUCTS SEGMENT Industrial product sales for the second quarter were a record $141.0 million, an increase of 42.4 percent from $99.0 million in the prior year. Excluding the acquisition of DCE, sales were up 25.8 percent to $124.6 million compared to the second quarter in the prior year. Year- (more) Donaldson Company, Inc. February 22, 2001 Page 4 to-date, revenues were a record $263.7 million, an increase of 43.0 percent from $184.4 million in the prior year. Excluding the acquisition of DCE, year-to-date sales were up 25.3 percent to $231.1 million. Gas turbine product sales grew 60 percent in the quarter and are up 62 percent year-to-date. Gas turbine product sales continued their extraordinary growth as the California power crisis highlighted a growing need to bring additional power generation resources on line throughout the United States. Dust collection product sales grew 47 percent in the quarter and are up 52 percent year-to-date. Excluding the acquisition of DCE, sales in dust collection products increased by 4 percent in the quarter and 9 percent year-to-date. Growth rates for U.S. dust collection product sales slowed in the second quarter as U.S. industrial production softened, especially in the automotive sector. The continued weakness of the Euro versus the Pound Sterling contributed to sluggish sales in Europe. Sales growth was strong in Asia, particularly Japan and Hong Kong. Sales of special application products increased 16 percent in the quarter and are up 12 percent year-to-date. Disk drive product sales were strong in the quarter, along with strong U.S. and European lithography product sales. ENGINE PRODUCTS SEGMENT Engine product sales for the second quarter were $138.6 million, a decrease of 13.5 percent from $160.2 million in the prior year. Year-to-date, revenues were $305.8 million, a decrease of 4.9 percent from $321.4 million in the prior year. The decrease in revenue reflects an overall slowing in the U.S. economy and difficult market conditions with customers having excess inventory and exerting price pressures on suppliers. Worldwide sales of medium and heavy-duty truck products declined 58 percent in the quarter and are down 52 percent year-to-date. Roughly 60 percent of this drop reflects the dramatic downturn in the North American truck market. The remaining drop reflects the company's decision to discontinue a block of business with a major customer due to unfavorable commercial terms. (more) Donaldson Company, Inc. February 22, 2001 Page 5 Worldwide sales of off-road products declined 5 percent in the quarter but are up 2 percent year-to-date. Exclusive of translation, sales would have been equal to last year's results in the second quarter and up 6 percent year-to-date. Aftermarket product sales grew 2 percent in the quarter and are up 12 percent year-to-date. The results reflect slowing sales in the United States, in line with the slowing economy, and flat sales in Europe. Demand continued to be strong in Asia. OUTLOOK Many of the business conditions present in the first half of fiscal 2001 are expected to influence the company's results in the second half of the year. The company expects continued strength in gas turbine product sales and special application product sales within the Industrial Products segment. Within the Engine Products segment, the company expects continued weakness in North American transportation products but expects the rate of decrease to begin to level off. Much of the plant and product rationalization costs have been incurred; consequently, future expense levels will begin to moderate. Business activity outside of North America (38 percent of revenues) should continue to offset much of the slowdown. The company expects the current economic conditions, including the strong U.S. dollar and softer U.S. industrial production, to persist throughout the remainder of fiscal 2001. Donaldson Company, Inc., headquartered in Minneapolis, Minnesota, is a leading worldwide provider of filtration systems and replacement parts. Founded in 1915, Donaldson is a technology-driven company committed to satisfying customer needs for filtration solutions through innovative research and development. Donaldson serves customers in the industrial and engine markets including dust collection, power generation, specialty filtration, off-road equipment, trucks, and automotive. More than 8,400 employees contribute to the company's success at roughly 40 manufacturing locations around the world. In fiscal year 2000, Donaldson reported record sales of more than $1 billion and achieved its eleventh consecutive year of double-digit earnings growth. Donaldson is a member of the S&P MidCap 400 Index and Donaldson shares are traded on the New York Stock Exchange under the symbol DCI. (more) Donaldson Company, Inc. February 22, 2001 Page 6 SAFE HARBOR STATEMENT UNDER THE SECURITIES REFORM ACT OF 1995 The company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is making this cautionary statement in connection with such safe harbor legislation. This earnings release, the Annual Report to Shareholders, any Form 10-K, 10-Q or Form 8-K of the company or any other written or oral statements made by or on behalf of the company may include forward-looking statements which reflect the company's current views with respect to future events and financial performance, but involve uncertainties that could significantly impact results. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "plan," "project," "should" and similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forecasts and projections are "forward-looking statements" and are based on management's current expectations of the company's near-term results, based on current information available pertaining to the company, including the risk factors noted below. The company wishes to caution investors that any forward-looking statements made by or on behalf of the company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to: risks associated with currency fluctuations, commodity prices, world economic factors, political factors, international operations, highly competitive markets, changes in product demand and changes in the geographic and product mix of sales, acquisition opportunities and integration of recent acquisitions, facility and product line rationalization, research and development expenditures, including ongoing information technology improvements, and governmental laws and regulations, including diesel emissions controls. For a more detailed explanation of the foregoing and other risks, see Exhibit 99, which is filed with the Securities and Exchange Commission. The company wishes to caution investors that other factors may in the future prove to be important in affecting the company's results of operations. New factors emerge from time to time and it is not possible for management to predict all such (more) Donaldson Company, Inc. February 22, 2001 Page 7 factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Investors are further cautioned not to place undue reliance on such forward-looking statements as they speak only to the company's views as of the date the statement is made. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. (more) Donaldson Company, Inc. February 22, 2001 Page 8 CONDENSED STATEMENTS OF CONSOLIDATED EARNINGS DONALDSON COMPANY, INC. AND SUBSIDIARIES (Thousands of dollars, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended January 31 January 31 ----------------------------- ----------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Net sales $ 279,631 $ 259,256 $ 569,500 $ 505,806 Cost of sales 193,315 179,661 397,228 352,330 ------------ ------------ ------------ ------------ Gross margin 86,316 79,595 172,272 153,476 Operating expenses 58,843 53,431 116,890 102,147 ------------ ------------ ------------ ------------ Operating income 27,473 26,164 55,382 51,329 Other (income) expense (1,590) (489) (785) (1,239) Interest expense 3,199 1,787 6,297 3,405 ------------ ------------ ------------ ------------ Earnings before income taxes 25,864 24,866 49,870 49,163 Income taxes 7,759 7,460 14,961 14,749 ------------ ------------ ------------ ------------ Net earnings $ 18,105 $ 17,406 $ 34,909 $ 34,414 ============ ============ ============ ============ Weighted average shares outstanding 44,273,159 46,035,692 44,422,165 46,061,422 Diluted shares outstanding 45,212,000 46,823,032 45,413,550 46,948,225 Net earnings per share $ .41 $ .38 $ .79 $ .75 Net earnings per share assuming dilution $ .40 $ .37 $ .77 $ .73 Dividends paid per share $ .075 $ .070 $ .145 $ .130 Capital Expenditures $ 8,868 $ 8,869 $ 15,255 $ 20,112 Depreciation and Amortization $ 8,619 $ 7,794 $ 18,631 $ 15,318 EBITDA $ 37,405 $ 33,943 $ 74,256 $ 66,441
(more) Donaldson Company, Inc. February 22, 2001 Page 9 DONALDSON COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands of Dollars) (Unaudited) January 31 July 31 2001 2000 ------- ------- ASSETS Cash and cash equivalents 27,427 24,149 Accounts receivable - net 217,039 202,361 Inventories - net 113,428 119,363 Prepaid expenses and other current assets 32,384 29,606 ------- ------- TOTAL CURRENT ASSETS 390,278 375,479 Other assets and deferred taxes 88,257 89,633 Property, plant and equipment - net 201,425 204,545 ------- ------- TOTAL ASSETS 679,960 669,657 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Trade accounts payable 76,044 82,320 Employee compensation and other liabilities 56,573 68,031 Notes payable 92,195 85,034 Income taxes payable 2,180 58 Current maturity long-term debt 255 279 ------- ------- TOTAL CURRENT LIABILITIES 227,247 235,722 Long-term debt 92,170 92,645 Other long-term liabilities 68,114 61,125 ------- ------- TOTAL LIABILITIES 387,531 389,492 EQUITY 292,429 280,165 ------- ------- TOTAL LIABILITIES & EQUITY 679,960 669,657 ======= ======= (more) Donaldson Company, Inc. February 22, 2001 Page 10 DONALDSON COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands of Dollars) (Unaudited)
Six Months Ended January 31 --------------------- 2001 2000 -------- -------- OPERATING ACTIVITIES Net earnings $ 34,909 $ 34,414 Adjustments to reconcile net earnings to net provided by operating activities: Depreciation and amortization 18,631 15,318 Changes in operating assets and liabilities (28,866) 169 Other 1,680 (8,349) -------- -------- Net Cash Provided by Operating Activities 26,354 41,552 INVESTING ACTIVITIES Net expenditures on property and equipment (15,255) (20,112) Acquisitions and investments in unconsolidated affiliates net of cash acquired 750 (30,099) -------- -------- Net Cash Used in Investing Activities (14,505) (50,211) FINANCING ACTIVITIES Purchase of treasury stock (10,297) (4,186) Net change in debt 8,077 26,892 Dividends paid (6,444) (5,988) Other 807 (260) -------- -------- Net Cash Provided by (Used in) Financing Activities (7,857) 16,458 Effect of exchange rate changes on cash (714) (296) -------- -------- Increase in cash and cash equivalents 3,278 7,503 Cash and Cash Equivalents-Beginning of Year 24,149 41,944 -------- -------- Cash and Cash Equivalents-End of Period $ 27,427 $ 49,447 ======== ========
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